Qualified Small Employer HRA

Qualified Small Employer HRA

New legislation has passed that allows an employer to reimburse for Individual Health Insurance Premiums on a tax free basis. This is a 100% deductible expense to the employer and tax-free to the employee. This new legislation bill is called the QSE HRA.

Click here to download the Qualified Small Employer HRA Flyer.

Here are some of the major points surrounding the QSE HRA.

  1. To Qualify for a QSE HRA:
    1. Must be between 2-49 FTE’s
    2. Does not offer group health insurance
  2. Funding
    1. Must be solely funded by the employer
    2. No employee funding is allowed
  3. Reimbursement Maximums
    1. $4950 for individual coverage
    2. $10,000 for family coverage
    3. Amounts may be prorated for newly eligible employees
  4. Reimbursable Expenses
    1. Health Insurance Premiums on or off the Marketplace
    2. All other Section 213(d) expenses (Out of pocket medical expenses)
  5. Plan Design- Plan must be offered in the same terms to all “eligible” employees
    1. 30 hours/wk is the maximum eligibility criteria
    2. 25 years of age is the maximum eligibility criteria
    3. Maximum waiting period and entry period of 90 days
  6. Employees must have a minimum essential covered plan
  7. The regulations are very clear that every expense must be substantiated prior to being reimbursed
  8. 3 Notices are required to be given to all participants in the QSE HRA
    1. Summary Plan Description must also be provided
    2. Penalties will be enforced for not providing 3 required notices and additional penalties of $100.00/day/employee for non-compliance.

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